The Economics of "Right to Work"
By David Henderson
I was at a conference last weekend at which one of the participants, from Michigan, was excited about the Michigan legislature’s passage of a “right to work” law. I started to share his excitement. On the other hand, some libertarian friends, on Facebook and elsewhere have criticized the law on the grounds that it prohibits certain contracts. So how should we think about right-to-work laws? I’m not sure although I lean strongly in favor.
First, it’s important to know what “right to work” laws are. They’re something that states are allowed to pass under Section 14(b) of the Taft-Hartley Act, passed in 1947. Here’s a succinct explanation. Here’s an even more succinct explanation from Pat Buchanan:
The closed shop, where a worker must belong to the union before being hired, is dead. The union shop, where an individual must join the union once hired, is dead. The agency shop, where a worker cannot be made to join a union but can be required to pay dues if the union is the agent negotiating the contract for all workers, is dead.
In other words, the right to work laws limit unions’ power to make people join a union and prohibit unions from charging dues to people who don’t join.
That sounds pretty libertarian. Still, some libertarians say it’s not. What’s their objection? The most articulate and detailed case I’ve found is this one by Gary Chartier. It’s not long and I recommend reading it. He makes a good point: if you don’t like government interfering in relations between employers and employees, then abolish the federal law; don’t substitute a new regulation on contracts between employers and employees. (These are my words for his thoughts; if I’m not doing him justice, then I’m open to being told why.)
Interestingly, though, Gary avoids mention of the word “monopoly.” He recognizes that federal labor law gives unions the power to negotiate for the whole labor force in a plant or a firm. That’s monopoly. Many libertarians, including me, have looked much more favorably on “right to work” laws as an offset to this illegitimate government-created monopoly. It’s only a small offset, as we’ll see.
So what do you do, given that we have this federal law that Gary and I agree is a bad law? Try to abolish it, of course. But what do you do meanwhile? Many libertarians have argued that you work within the existing law to try to minimize the harm done by monopoly unionism. And a way to do that is with right-to-work laws.
It’s true that such laws make it illegal for employers to do what some of them might want to do: namely hire only union workers, require everyone who works for them to join unions, or require everyone who works for them to pay dues to a union. But are there really likely to be many such employers? I don’t think so. In fact, if you are such an employer, please say so in the comments below.
Take the extreme case where there are no such employers. Then the law is forbidding employers to do what they wouldn’t want to do anyway. So why have the law? To reduce the legal power that unions have over their members and over non-members who work in a place where the union exists.
Now, I don’t know that there are no such employers. Maybe there are some. If so, then it becomes a tradeoff. On the one hand, preserve the rights of many non-union workers, many union workers, and unionized employers but trample on the rights of those few unionized employers. On the other hand, trample on the rights of many union workers, non-union workers, and unionized employers but preserve the rights of those few unionized employers. I choose the first option because I think it tramples on way fewer people’s rights. And, remember, that if you say right-to-work is wrong and you get your way just on that issue, the federal government will continue to trample on many people’s rights.
Of course, “right to work” does not at all prevent the union from becoming the sole bargaining agent for the whole work force. That’s too bad because workers should be able to make their own deal with their employer if the employer wants to do so. In the 1990s, I attended a conference on Korea’s economy at the Hoover Institution. One of the issues was unionization. I don’t remember the speaker or the whole context but at one point I asked the speaker if people were free in Korea’s economy to make their own wage agreement with their employer. The speaker said “No” but then said this would not matter because it would be the rare employee who can bargain for a higher wage. A number of labor economists there turned and looked at me as if I was being unrealistic in thinking that a lone employee could do that. I looked back at them as if they had forgotten Econ 101 and said, “Of course, they wouldn’t typically use their freedom to bargain for a higher wage; they would use it to bargain for a lower wage.” Unions monopolize work forces and keep wages higher than otherwise, causing some workers not to be employed who would otherwise have been employed. I was pointing to the unseen: the people who would want a job at, say, $15 an hour but couldn’t get one because the union wage was $18 an hour. Unfortunately, “right to work” laws don’t get rid of this monopoly power.
It’s possible that this failure to abolish their legal monopoly is the reason that most commentators have focused on one salient part of right-to-work: its prohibition on unions being able to make non-union workers pay dues. I would like to see Gary Chartier or others address this specific issue.
Note: As I said at the outset, I lean strongly in favor of right-to-work laws. But that doesn’t mean I’m not persuadable. I’m more open to the idea that my view on this is wrong than I am to the idea that my views on slavery (against), legally required racial discrimination (against), rape (against), or murder (against), to name four in no particular order, are wrong.
UPDATE: I recommend that you read the article that Sheldon Richman links to in the comments below. Here’s my comment on the article. There’s little in it that I disagree with. As I said from the outset, the best solution is to abolish the law that gives government-enforced monopoly power to unions. Sheldon and I agree on this. The issue here is whether we should just settle for saying that and pushing for that or do something else meanwhile. Sheldon gives some interesting historical background on Percy Greaves’ role in trying to roll back or abolish the Wagner Act. I did not know any of this. Had I been a U.S. Senator at the time, I would have gone with what Greaves said. The present issue, though, is what we do now. I do have one nuanced disagreement with Sheldon. He writes, “Greaves’s prediction was accurate.” Greaves had predicted that passing Taft-Hartley would take pressure off the push to repeal Wagner. Probably true, but we don’t know that it’s true. Moreover, it’s not clear that the pressure to repeal Wagner, though probably higher without Taft-Hartley, would have been enough to get repeal.